HEALTH REFORM: :
Will It Happen ?
What Are We Reforming
Anyway ?
Linda Reivitz
Chaos and Complex Systems Seminar, Dec 1, 2009
12-1-09 LEC HCRefm Chaos Seminar Final.ppt
For any policy change to occur, you
need a :
•
Problem (a recognized problem)
•
Policies (solutions to the problems)
•
Politics
Why policy change is not ‘rational.’
[model from: John Kingdon, Agendas, Alternatives, and
Public Policies. Harper Collins, 1995. ]
Health Care Reform: What is IT ?
“It” reform] solves a problem. [e.g reduce the #
[
uninsured, reduce overall costs, reduce my cost, get better
quality care, mental health parity, more immunized kids,
end the strangulation caused by medical practice, more
accountability through Info Technology, childhood
obesity, price transparency.... And many more.]
Which “health care reform” plan is
best ?
The answer depends on how you define “reform”
and which problems you want to fix.
Basic ‘Health Reform’ Concepts
•
•
•
•
•
•
•
•
A single payer system
Tax credit
Tax deduction
Pay or Play
Individual Mandate
Consumer directed health plans
Expand public programs [MC, MA, CHIP]
Health Insurance Exchange
Most health reform plans contain 1 or more of these concepts.
Basic “reforms”
• A single-payer system – system in which
there is only one source of money to pay
providers; can be the taxpayers; an
insurance company; can be national or state.
The benefit is administrative simplicity &
subsequent ‘cost savings’.
• A way to finance healthcare [e.g. Medicare], not necessarily a way to
provide universal insurance or provide needed systemic change.
• Wisc (2007) Budget delayed because state Senate ‘held out for’
Healthy Wisconsin proposal; to provide universal insurance, which
would be purchased through an Exchange, and paid for with a tax of
9%-12% on employers. Governor supported expansion of Badger
Care.
• Tax credits: an amount subtracted from
your computed tax when determining taxes
owed.
An incentive to purchase h. insurance in
the private market.
[e.g. you are eligible for a $8,000 tax credit if you
are a first time home buyer]
• Tax deduction – amount subtracted from
revenues/income to determine taxable income. (Business
deductions for employee h. insurance @ $246 Billion/yr).
– Eliminating the tax deduction for health insurance–
in whole or in part–being considered by Congress.
• If eliminated, that would provide revenue for health
care reform; but could substantially end our system of
employer-sponsored insurance.
– Pres. Candidate John McCain proposed the
elimination of the tax deduction; to be replaced, in
part, with a tax credit for individuals/families and
an individual mandate to purchase insurance.
Sen Wyden proposal would eliminate the deduction; current
Senate reform proposals tax ‘cadillac’ insurance policies.
• Pay or Play – employers must provide
insurance to their employees/dependents (‘play’)
or ‘pay’ into a health insurance program which
will do so. [pay or play = an employer mandate]
+ Equalizes the burden on employers e.g. Wal-Mart;
+ Decreases the number of uninsured;
+ Saves taxpayer $$ for services provided to the uninsured
– But those opposed say, it is:
• A burden on small employers (eg 80/20% , 50%/50% split)
• It doesn’t do anything to control h.c. costs
• May damage the economy of the entity which enacts
it. (i.e. it drives employers elsewhere.) Was enacted,
and repealed, by California voters.
• Individual Mandate – individuals must
purchase insurance for themselves
/their families [likened to mandate for auto insurance]
Individual mandate is meant to:
– Increase individual responsibility
(politically popular idea);
– Increase the size of insurance ‘pools’ -- and
thereby reduce the cost of insurance.
(This ‘mandates’ relatively ‘healthy’ people into an insurance pool to
help pay the cost of care for those who are less healthy. Why do
people oppose an individual mandate : 1) they oppose government
mandates; 2) costs will go up for many younger people.
Importance in reform debates in 2009:
AHIP and major health insurers have said that if
Congress enacts an enforceable individual
mandate:
1. Insurers will end the practice – in the individual
insurance market -- of charging different
premiums based on an individual’s health status;
[if you have health problems you pay much higher premiums for
insurance, assuming they will sell you a policy at all.]
2. Insurers will guarantee issue of coverage for
people and won’t exclude coverage for preexisting conditions.
Part of a political strategy to fight creation of a public plan.
Massachusetts “Reform”
• Legislation, signed by Gov. Mitt Romney 4-12-06.
• Focus was to decrease the number of people
uninsured; not cost containment.
• Combines an individual mandate, pay or play and
subsidized health insurance (based on income).
• Often looked at as a ‘new national model’.
• Required all Mass residents to purchase an ‘affordable’
health plan by 7-1-07, or forfeit their personal state tax
exemption [$150]. [Individual Mandate]
• Those who don’t comply in Yr 2 will have to pay a fine--worth half the monthly premium of an ‘affordable’ plan.
• Taxpayers subsidize insurance for those with incomes
up to 300% of the FPL. [$32,500 individual; $66,000 family of 4 ]
• Businesses w/ > 10 workers that do not provide insurance
would be assessed up to $295 per employee per year.
[Pay/Play] [$900 per employee in 2008]
• Lower-cost basic plans will be available for 19-26 yr olds.
• Federal waiver would provide ~ $400 million to help pay
the cost of the program.
Mass. required that the law exempt residents
who cannot “afford” health insurance
(an agency called ‘the Connector’ was created and defines
‘affordability.’)
In April, 2007, the Connector decided to
exempt ~ 20% of uninsured Mass. residents
from the law. (i.e. this was meant to be, but is not, a
universal plan)
Example: Individuals with $30,000-$50,000 incomes would not get subsidies and
would be exempt from fines/ tax penalties, if they couldn’t obtain insurance for
< $150 - $300/month. Actual number depends on income and size of family.
See 2009 Affordability Schedule at: www.mahealthconnector.org
The law has worked as expected:
• The uninsured rate in
Massachusetts is the lowest in
the nation.
• Costs for health care are high,
and growing.
Consumer Directed Health Plans
[the philosophy: let consumers decide; let the market work; the
market is the best way to lower cost.]
(1) Association Health Plans
[supported by Sen McCain]
(2) Health Savings Accounts
Presidential Election
2008
In general, the Republican candidates:
• Supported tax credits or deductions to make it easier for
those with lower incomes to purchase private insurance
(esp outside the work place);
• Supported the use of HSA’s and AHP’s (they would not
expand programs like Medicare);
• Did not support universal coverage thru individual
mandates such as that enacted in Massachusetts;
• Supported less regulation of the insurance industry (this
will lead > individual choice and > affordable insurance)
• Supported medical malpractice system reform
• Said we must do something about cost before we consider
universal coverage.
In general, the Democratic candidates:
• Wanted to insure everyone, via: employers, expansion of
public programs [MC, MA, SCHIP] and/or an individual
mandate;
• Wanted to leave private insurance in place, but give people
the option of buying federal insurance modeled on
Medicare or the insurance available to federal employees
[the public plan ]
• Would require (large/er) employers to provide insurance
or pay a tax to support health insurance. [pay/play]
• Believed insurers should be required to cover all those who
apply to purchase insurance. [insurance reforms]
Candidate Obama’s Plan
• Expand existing public insurance programs and
subsidize insurance for those with low incomes.
• Mandate insurance for kids [not adults].
• Require large/medium sized employers to provide health
insurance or pay a fee instead. [pay or play]
• Prohibit insurance companies from denying insurance to
individuals because of pre-existing conditions [no underwriting];
• Provide tax credits to small businesses (to offset their
cost of providing employee insurance)
• Invest in Electronic H Records and H Info Technology
• Allow importation of prescription drugs; negotiate Rx
prices in MC/MA .
Support funding for Comparative-Effectiveness research
• Also supported by Senator McCain.
• $ 1.1 billion included for C-E in stimulus bill enacted Feb,
2009.
• Has become controversial: e.g. mammography guidelines issued
11/09.
Establish a National Health Insurance Exchange, where
individuals and small businesses could compare and
purchase private insurance plans or a new public
health plan (similar to Medicare).
Model: the Massachusetts Connector.
A New Public
[Insurance]
Plan
Goal: reduce the number uninsured, compete with
private insurance and make the insurance market
more efficient.
• The public plan would be offered by the National
Health Insurance Exchange. [Note: you can have an
Exchange without a public plan.]
• Has become a lightening rod.
Democrats won’t vote for ‘reform’ without it. Republicans call
it the beginning of a single-payer, government-run health care
system; meant to end private insurance.
Public Plan: areas of possible compromise:
1. Will the public plan be open to everyone or
only to the uninsured and small employers.
2. Will the public plan pay doctors/hospitals the
same as Medicare; or will it negotiate rates
with private insurance plans.
3. Will it be mandatory, or only if state opts in.
4. Will it be mandatory, or mandatory only if
private insurers fail to offer in a state, plans
that meet a reasonable cost standard. (the
“Trigger”……Sen Carper D-Del )
What is happening?
What is likely to happen?
Should we be optimistic that
Congress will enact
“health care reform”?
Health Care Reform Proposals:
House vs. Senate*
(*Sen. Reid compromise)
(As of 12/1/09 – to the best of my knowledge. Because of the
complexity of the material [each draft bill is approximately 2000
pages], and different sources used, it is possible there are errors in
the following material. Hopefully they are not major ones.)
\H vs S proposals Chaos Talk x1
CRITERIA
HOUSE
Who is Covered
96% of legal residents
(currently: 85% of
population)
(18 million uninsured)
Individual
Mandate
SENATE
94% of legal residents
Most required to have
Everyone must have
insurance. If refuse to
insurance; or pay a fine
purchase insurance, penalty of
of up to 2.5% of AGI.
$95 in 2014; could reach
(Individuals can apply for
$750/yr in 2016.
hardship waiver if
insurance is
Premiums capped at 9.8% of
unaffordable)
income. (Econ hardship
exemptions possible).
Penalty cannot exceed
average national premium
for basic coverage.
Companies with > 200 workers
Employers must provide
required to automatically enroll
insurance, or pay penalty of
employees in h plans.
8% of payroll.
Companies with > 50 FT
Companies exempt if
workers that don’t offer
payroll is < $500,000/yr;
insurance pay a fee up to $750
penalty phased in if payroll
X size of work force if govt
is
btwn
$500,000-$750,000;
(“Pay or Play”)
subsidizing employees
coverage.
Businesses w/ 10 or <
workers get tax credits to
Tax credits available for small
help provide insurance.
businesses.
Employer
Mandate
Subsidies
Indiv/families w income up to
400% FPL [$88,000/yr family of
4] can get subsidy to help
Tax credits for
purchase insurance thru the
indiv/families making up
Insurance Exchange.
to 400% of the FPL.
Subsidies begin 2013.
(Prior to that, a temporary highrisk pool would be set up for
those denied coverage. They
would be eligible to purchase a
government subsidized policy.)
Cost
$1.2 Trillion over 10 yrs.
$848 Billion; reduces
federal deficit by $130B
over 10 yrs [CBO]
How
Reform
Is Paid
For
40% tax on “Cadillac” health plans
5.4% surtax on those making > $
[on employer group plans with
500,000/yr (S) and $1 million/yr
premiums > $8,500 (S), $23,000
(couples) $460B
(family) . Generates $149B from
2013-19.
Cuts to MC/MA ($400B over 10
Fees (annual) on insurance,
yrs); of this, $117B cut to
medical device, & drug companies
Medicare Advantage plans.)
($102B, 2010-2019).
2.5% tax on Medical devices sold
Cuts to MC/MC of $436 B; of
in the US
including $118B for MC Adv plans.
[Recall: penalties for individuals who don’t
purchase insurance; 2.5% of AGI.]
Incr MC payroll tax (from 1.45%
to 1.95%) if income is
>$250,000/yr. [$54B]
5% tax on elective cosmetic
procedures. [‘Botax’]
Fines for individuals who don’t purchase
insurance: $95 in 2013; $750 in 2016.
Benefit
Package
A Committee will recommend an
“essential benefits package”
OOP costs are capped. This will
be the “basic benefits package”
offered in the Exchange.
All plans sold to indiv/small
businesses would have to
cover “basic benefits.” There
would be 4 levels of benefits.
Least generous would pay ~
65% of hc costs/yr.
[Yrly premiums: ~$5300 single;
$15,000 family , by 2016]
Public plan would be
available through an
Public Plan
Insurance Exchange. Rates
paid to providers will be
negotiated by DHHS Secy
[not tied to MC rates].
Public plan would be
available through
Insurance Exchange.
State could opt out.
Plan would negotiate
payment rates with
providers.
[No ‘trigger’ required, as
proposed by Senator
Snowe]
Health
Insurance
Exchange
Exchange opens in 2013, Self-employed and small
for individuals and small businesses could pick a
plan offered thru stateemployers only. May be
open to large employers based purchase pools.
over time.
Employees allowed to
keep their work-provided
coverage.
Medicaid
Changes
Expands coverage to
individuals / families w/
incomes up to 150% of
poverty [$33,075/yrfamily of 4]
Expands coverage to
individuals / families w/
incomes up to 133% of
poverty [$29,326/yrfamily of 4]
[ 100% FED 2013-14;
90/10% thereafter]
Insurance
Reforms
No denial of insurance based on pre-existing
conditions;
No higher premiums for pre-existing conditions
or gender.
Limits on level of premiums based on age.
Medicare Commission :
System
Efficiencies,
Bending the
Cost Curve,
to reduce the rate of growth in MC spending. Under
some proposals Congress could only have up/down
vote on recommendations of the Board.
Goal is to encourage the adoption of best practices
by providers and recommend cost savings…such as
reducing hospital infection rates and encouraging
and Rewards for better coordination between teams of providers;
emphasizes Evidence Based Medicine,
High Quality
Care
•Incentives for doctors/hospitals to coordinate care;
•Tax on high-cost insurance;
•Bundling MC payments to providers;
•Comparative-Effectiveness Center;
•Delivery system ‘pilots’ [Accountable care
organizations”; “medical home pilot”];
•IOM study of geographic variations in h. spending.
Contentious
Issues Still
Being
Debated
•Abortion
•Guns
• ‘Death Panels’
•Immigration
•Individual Mandate
[Is it constitutional ?]
among others.
Is Strong, Effective Health
Reform Going to be Enacted
YES.
What does that mean.
The answer depends on how you
define “reform” and which problems
you want to fix.
Thank You
Linda Reivitz
UW School of Nursing
K6-326 UWHC
263-0469